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Grand Committee examines Tenant Fees Bill

Tuesday 06 November 2018

The Bill set to ban almost all charges that letting agents operating in England can make to tenants, began Committee stage in the House of Lords on 5 November.

Grand Committee

During Committee stage, Parliamentarians examine the Bill before them line by line. In the House of Lords, any Lord is permitted to take part as part of a ‘Grand Committee’. Every clause of the Bill must be agreed on, and any votes on proposed amendments take place unless the amendment is withdrawn. The Lords are provided with a ‘marshalled list’ of any tabled amendments on the day, those proposing the amendments may discuss an issue for any unrestricted period of time.

Has the Bill changed?

Following the first day of the Grand Committee, there has been no further amendment to the Tenant Fees Bill.

Despite lengthy discussion, Amendments 1 to 24 were either withdrawn or not moved by the Lord who had tabled them. The peers in attendance agreed on Clauses 1 to 33.

Adjourning the Grand Committee at 7.30pm, the Lords still have further considerations to make on Schedule 1 of the Bill, with Amendments 25 to 37 still to be examined.

The Government has not yet confirmed when the Grand Committee will reconvene. However, Report stage is currently tabled for 20 November. ARLA Propertymark will communicate any further developments made during Committee via the newsletter

What was discussed?

The Grand Committee was opened by the Amendment 1 from Liberal Democrat Baroness Grender. The Amendment had it have passed, would have required a letting agent or landlord to provide their tenant reasons in writing as to why they had not had their holding deposit returned. The statement in writing would have also had to indicate what false or misleading information had been provided by the prospective tenant (if any), in the case where the prospective tenant wished to contest the decision.

Liberal Democrat, Lord Shipley, raised the issue of decreasing the one weeks’ rent cap on holding deposits to three days’ rent instead. He questioned how the Government had arrived at the one week’s rent cap and why they had chosen it. Lord Shipley also asked why the Government had changed the cap on security deposits from four weeks to six.

Lord Bourne of Aberystwyth (Parliamentary Under-Secretary – Housing, Communities and Local Government) made it clear that although the legislation sets an upper limit to deposits, the limit does not necessitate a norm, using legislation in Scotland as an example:

“The level of the actual deposit in Scotland is set at eight weeks, but there is evidence that it is not being adopted as the norm. that is the upper limit and so would be the case here.”

Speaking for the first time on the Bill, the Earl of Lytton expressed:

“The people who might be in difficulty are those who really need to get into rented accommodation because they stand no chance of getting a mortgage. This is why this sector is so important. I worry that tenants at that end of the spectrum… the less well financially appointed end – will suffer more.”

In March 2017, ARLA Propertymark’s research commissioned with Capital Economics, indicated that lower income households who are less likely to move on a frequent basis, will see a loss – whereas frequent movers will initially benefit from the reduction in upfront fees as proposed by the Bill.

Lord Kennedy of Southwark, a Labour peer was particularly vocal during Committee, having tabled 15 amendments for consideration. Amendment 2 would have added a provision for a statutory instrument that would enable transferrable deposits at the end of a tenancy, this was withdrawn. Amendment 21 tabled by the Labour peer would have prohibited the payment of a holding deposit where the tenant had not yet been given a copy of a draft tenancy agreement.

Speaking on behalf of the Government, Lord Young of Cookham made it clear that Amendments 7 and 8 (which would seek to give tenants further compensation where they had been charged a prohibited payment) would not be passed, as the Government does not think it would be appropriate to further compensate tenants in addition to the repayment of owed money. However, he agreed to speak with Baroness Grender into looking further into penalties where letting agents or landlords charge prohibited payments.

Lord Bourne indicated that the Government are looking into omitting those who provide home-share schemes from the definition of ‘letting agents’ in the Bill and announced that the matter brought forward by Baroness Barran in Amendment 12 would be addressed later in Report stage.

In response to Baroness Grender putting forward Amendment 23, which would remove default payments as a permitted payment, Lord Bourne signalled that payments in the event of a tenant’s default would be scrutinised further but not removed saying:

“There are situations where it is quite reasonable that a landlord should be able to claim from the tenant for doing something that is perhaps the tenant’s obligation but which the landlord has taken up.”

Amendments to bring forward the commencement of the Act, and proposals that would have disallowed holding deposits being taken from multiple tenants were also withdrawn.

What are we doing to help you?

Our dedicated The Ban on Letting Agent Fees page in our Lobbying section tells you exactly what we have done and are continuing to do in communicating the interests of our members in both England and Wales.

Members can read more about what exactly is a ‘permitted payment’ in our comprehensive Tenant Fees Bill Fact Sheet.

Whilst the Tenant Fees Bill only affects letting agents and landlords in England, we have also created a Fact Sheet for our Welsh members concerning the Renting Homes (Fees etc.) (Wales) Bill, which was introduced to the Welsh Government in June of this year.